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The world of outsourcing is in the throes of dramatic change driven by the digital
service revolution. According to a Gartner Survey, 70% of CIOs believe they will change
IT outsourcing relationships, to support their organization’s digital agenda. Many
pioneering service providers are seizing this opportunity to deliver strategic business
outcomes that extend beyond costs savings. For instance, the Indian BPM industry has
evolved significantly over the years, and today, provides end-to-end business
transformation and platform based solutions.

At the same time, the evolution of outsourcing makes the decision to outsource a lot more
complex in today’s digital scenario. So how can you effectively evaluate the changing landscape
to determine if you have the ability meet your digital IT needs in-house or if you need an
external provider? Or if you already have an existing outsourcing contract, how can you re-evaluate
the existing relationship and the ability of the vendor to deliver value-added services?

Answers to these three questions can help you chart your course in the digital age:

1. Does your project require specialists in different technologies?

80% of incremental IT expenditures over the next decade may be driven by digital technologies,
such as platforms, cloud-based applications, Big Data analytics, mobile systems, social media,
and cybersecurity. It will also include services for integrating these technologies with core
legacy technologies. Complex IT implementations, such as these, require a holistic approach that
combines competencies in multiple technologies.

The question is – do you have the right mix of skills in-house to handle the new digital demands within tight budgets and timelines? Outsourcing allows you to build a team of specialists with little effort and kick start your project quickly. Service providers also offer access to a cutting-edge talent pool and thought leadership, along with proficiency across verticals and horizontals. This directly translates to greater flexibility and scalability for your organization.

2. Are you looking to avoid costly delays in IT projects?

According to research by Genpact, companies may collectively waste approximately $400 billion per year during their digital transformation journey. A report from BCG Perspectives, states that the probability of successfully delivering a large IT project (with an investment of more than $10 million), is roughly one in ten, and the cost of failure can be significant.

Moreover, businesses are under pressure to deliver tangible results in much shorter time frames. In fact, 49% of today’s enterprise buyers expect to move to a wide-scale transformation of business processes, enabled by new technology tools/platforms, in just two years. Outsourcing your IT needs can control costs and reduce your overall project risk. This includes hiring and onboarding costs as well as capital expenditure since the vendor is responsible for the physical infrastructure. It also ensures that you don’t have to deal with underutilized assets after the project is completed.

3. Is accelerating innovation a top priority?

Outsourcing is no longer just about maintenance and support. The right managed services provider (MSP) can actually support both your short and long term innovation and growth agendas. According to Deloitte’s 2016 Outsourcing Survey, 35% of organizations measure outsourcing value through innovation. Cloud computing as well as robotic and cognitive process automation are being seen as key innovation areas.

It is important to carefully select a service provider organization where innovation is already ingrained in the culture. Some of them may have also invested in research and innovation labs to bring disruptive ideas to life and co-innovate with customers. Remember, that while innovation can be done in-house, a strategic outsourcing partner can bring a fresh perspective and innovative solutions to help you gain competitive advantage.